Kelly has told his own board of directors that he's in discussions with the Charlotte bank, the paper said, citing people familiar with the matter. The bank had talked to Kelly previously, but he had spurned the bank's advances, even sending a memo to top lieutenants saying that he wasn't interested.

A Bank of New York spokesman on Friday told the Observer that the bank wasn't commenting.

Lewis, CEO since 2001, said in September that he was stepping down at year's end. Since then, a board search committee has been looking at internal and external candidates. The bank's repayment of $45 billion in government aid likely makes the job more attractive to outsiders because the bank now won't face extensive restrictions on compensation.